Sembcorp Marine share value down but not out

Singapore: Sembcorp Marine is the second-biggest decliner on Singapore’s Straits Times Index so far this year, according to Bloomberg. Sembcorp has lost about S$1.65bn ($1.3bn) in market value during 2014 and its share price has fallen 18% over the course of the year.

The stock is the most-shorted on the Singapore bourse, according to Markit Group data compiled by Bloomberg.

Investors are worried that the decline in oil prices is not good for the sector as a whole. Investment fund Henderson Global told press it had sold its interests in Sembcorp during the past couple of months due to uncertainty about the company’s order flow on the back of the falling oil prices.

Meanwhile, analysts say that worries about the recent decline in Sembcorp Marine’s share price and concerns about an oversupply of new drillships have been overstated.

Ms Low Pei Han at OCBC Investment Research in Singapore said that while orders for exploration and drilling units are weak, there should be demand for offshore production facilities, which could help Sembcorp Marine win more orders next year. Ms Low upgraded the stock to buy from hold earlier this month.

Sembcorp Marine closed at S$3.65 on the Singapore Exchange today, up S$0.01 on the previous day. [14/10/14]